Alltel-Western Wireless Merger Order Close to Circulation
The FCC order on the proposed $6 billion Alltel- Western Wireless merger could circulate among the commissioners in the next 2 weeks, an FCC source said Thurs. The order “is still at the [Wireless] Bureau and I am hoping we are going to get it to the Commissioners in June,” the source said. The FCC started its self-imposed 180-day clock for deciding the merger March 1.
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The FCC will likely beat “by several weeks” the deadline for acting on the Alltel-Western Wireless merger, Western Wireless attorney Doane Kiechel told us: “The Commission has been very effective in processing this transaction and… they are making a very good effort to process this fast.” Citing FCC Chmn. Martin’s indications that the FCC is on track with merger reviews, another attorney said: “I am optimistic the Commission will meet the 180-day deadline for all [merger] deals.”
“I don’t see a reason why Chairman [Martin] wouldn’t want to have it [merger] done within 180 days,” said a 2nd regulatory attorney who follows the merger. “But he [Martin] will probably want to give his staff enough time to complete the review. There is a lot of information to review.” The Alltel-Western Wireless merger is “not controversial, but it has implications in terms of roaming,” the attorney said: “I can see them [FCC] meeting exactly 180 days or less but not by much.” A 3rd regulatory attorney said: “They [FCC] have a template now from the Cingular-AT&T Wireless merger review and that would make the task much easier.”
The Alltel-Western Wireless merger is expected to be approved “subject to conditions,” Kiechel said: “We are confident that any conditions imposed will be appropriately tailored to any concerns about competition which should be minimal with this transaction… We have confidence that limited conditions are going to be fair.” Without going into details, Kiechel said: “There will be limited divestitures.”
Based on the precedents, the FCC’s general principle is to examine markets where the merging companies have overlapping operations. The FCC has requested specific market information for CMAs and CEAs where Alltel and Western Wireless control overlapping spectrum licenses, such as Neb., Kan., Ark., Tex. and Mo. Those could be the markets where conditions apply, some predicted.
The Alltel-Western Wireless merger is unlikely to face significant conditions due to the companies’ complimentary rather than overlapping footprints, one regulatory attorney said: “The only one is [Alltel’s] wireless-wireline properties in [small portions of 4 states, mostly in Neb.], so the question is whether that’s a problem.” The Commission may require some wireline assets divestitures in those markets as a condition to the merger approval, the attorney said. But another industry attorney indicated that a wireline assets divestitures condition would be unlikely in Alltel-Western Wireless case, given that the Commission didn’t impose any such conditions in the Cingular-AT&T Wireless merger, where Cingular’s parents -- SBC and BellSouth -- had wireline operations in numerous markets where AT&T Wireless had wireless operations. “It’s pretty clear that the two holdings have overlaps in Kansas and Nebraska,” a 3rd attorney said: “The issue there is divestiture in a few markets just because of overlaps.”
Roaming issues will likely be addressed by the Commission “through the appropriate proceeding,” Kiechel said. The merger has faced strong opposition from rural wireless carriers concerned about their ability to keep roaming arrangements with Alltel and Western Wireless. But Kiechel said: “The concerns about roaming can’t be fixed in the context of the merger order and need to be addressed in other proceedings. We are confident the FCC will handled those concerns in an appropriate manner.”
The merger order is unlikely to face any significant debate on the 8th floor, Kiechel predicted: “We have confidence that the structure of the transaction will minimize the red flags from any reviewing party… The nature of this merger where you have largely complementary markets and operations has raised few issues that couldn’t be resolved with a minimum of controversy. There are no big issues in this transaction… We are still optimistic that the [Commission’s] vote may happen in June.”
“The FCC has demonstrated they can handle a sizable merger transaction very efficiently with focus on the right issues at a very challenging time when there is a lot of consolidation in the industry and we are pleased that they are efficient and capable of handling our transaction,” Kiechel said: “The FCC and the Justice Department are working together very closely on this and we expect them to be consistent in their requirements for approval.”
The proposed Sprint-Nextel merger hasn’t left the Wireless Bureau, the FCC source said: “I am not sure when it’s going to leave the Bureau, but we are trying to move it quickly.” The Bureau is still reviewing the data submitted by several wireless carriers in response to the Commission’s request. Bureau officials held a meeting with Sprint and Nextel representatives this week to clarify some data submitted by the companies. Sprint and Nextel said they “agreed, where appropriate, to supplement as promptly as possible their responses to address staff’s questions.”